UK steel production slumps as energy costs soar

12 May 2023

Statistics show Government’s competitive energy cost measures are needed sooner rather than later

UK Steel, the trade association for the UK steel industry, says that high energy prices and weak demand are taking an enormous toll on UK steel production. Efforts to boost the sector’s competitiveness need accelerating.

Statistics released today show production levels of steel made in the UK during 2022 dropped to their lowest level since the Great Depression, falling by 17% on year to 6 million tonnes (mt). Steel trade activity reduced both in the UK and globally as supply chains were disrupted and demand has reduced.

In 2022, UK market demand for steel fell by 15% to 8.9mt, only slightly higher than 8.6mt in 2020 during Covid, raw material costs remained at historically high levels and energy prices soared.

High costs are hard to swallow and force production levels down. This February, Government announced policy plans for renewable levies, capacity charges and network costs to alleviate energy cost burdens for steel producers and improve competitiveness, but regulations may not all take effect until 2025.

Gareth Stace, Director General of UK Steel, said:

“Government needs to back British-made steel now more than ever. The already challenging demand environment is only worsened by elevated energy prices. Steel companies in the UK are footing electricity bills of 60% more than our direct competitors in Germany."

“Statistics show the stark reality of how UK steel is suffering. British-made steel plays a key role within supply security against conflict and political sanctions. This is exactly why we are asking Government to implement its highly welcomed energy policy measures by April 2024.”